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Thursday, 28 May 20
COVID-19: A FORCE MAJEURE EVENT? - KYPRIANOU
KNOWLEDGE TO ELEVATE
While seeing the unexpected COVID-19 outbreak expanding worldwide and the first cases being identified in Cyprus, the commercial sector does not remain unaffected. Emergency measures such as travel restrictions, citizens placed on quarantine and self-isolation are only some of the factors that started to impact parties to commercial transactions that render contract performance physically or commercially impossible. May a party invoke contractually agreed force majeure clauses or, the doctrine of frustration in an attempt to protect themselves from being unable to meet its contractual obligations?
Force Majeure
The concept of “force majeure” (meaning "superior force"), is used commonly in contracts as a clause that essentially releases both parties from liability or obligation when an unexpected event or circumstance beyond the control of the parties, prevents one or both parties from fulfilling their obligations under the contract.
Determining whether the Corona-virus outbreak constitutes a force majeure event, is a matter of construction and will depend on the specific wording and the scope of the clause.
It is the case that force majeure clauses often contain a list of events that qualify as force majeure events. For instance, terms such as “epidemic”, “pandemic”, or more generic terms such as “disease” and “illness” are often expressly listed as events of force majeure. In such cases, it will be easier to claim force majeure protection, as COVID-19 is likely to qualify as a force majeure event. Also, terms such as “acts of government” or “national or regional emergency” may be listed so as to cover emergency measures taken by the government such as travel bans or placing citizens in quarantine in case of this novel outbreak.
Additionally, under common law, a party seeking to invoke that its ability to perform the contract has been prevented by a force-majeure event, has the burden to prove certain elements. These are:
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that the event was unforeseeable;
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that it has taken all reasonable steps to avoid or mitigate the effects of the force majeure event; and
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that the event was beyond its control and thus impossible to overcome.
Most importantly, there must be a causal connection between the force majeure event that made it physically or legally impossible to perform the contractual obligations. With the COVID-19 case, the affected party has to show that due to the outbreak of Corona-virus and its resulting governmental measures, no alternative measures exist for performing its duties under the contract.
Frustration
In case the contract does not include any force majeure clause, the affected party may attempt to excuse its failure to perform its contractual obligations under the doctrine of frustration. Subject to Section 56(2) of the Contract Law Cap.149, as amended, “a contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful. As interpreted by Cyprus courts, section 56(2) is only applicable to an impossibility which destroys the foundation of the contract, which requires a high threshold for proof of frustration of a contractual undertaking.
Recommended actions
If you have executed a contract or are considering entering into new contract during this period, you should review the force majeure clauses carefully in order to understand the circumstances under which you can declare a force majeure and whether the Corona-virus outbreak and the resulting emergency measures may fall under its scope.
By Andria Kouloumi
Further, notification processes and deadlines should be also reviewed carefully, in order to ensure that your ability to claim force majeure protection is not precluded. Importantly, if you intend to enforce such force majeure clauses, you should consider your obligation to take all the reasonable measures to mitigate the effect of non-performance, otherwise your failure to perform your obligation may not be excused. If in doubt regarding how a force majeure provision applies and whether force majeure protection may cover you, it is recommended to seek legal advice prior to taking any action or sending notices.
Michael Kyprianou & Co LLC is ready to assist and advise you in relation to issues you may face, including by providing advice as to your options and requested objectives, enabling you to make an informed decision.
The content of this article is valid as at the date of its first publication. It is intended to provide a general guide to the subject matter and does not constitute legal advice. We recommend that you seek professional advice on your specific matter before acting on any information provided. For further information or advice, please contact Andria Kouloumi, Associate, at Andria.Kouloumi (at) kyprianou.com
If you believe an article violates your rights or the rights of others, please contact us.
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Wednesday, 17 June 20
MARKET INSIGHT - INTERMODAL
After experiencing record earnings during the first half of the year, the focus of headlines concerning the tanker market has shifted from the deve ...
Wednesday, 17 June 20
KOREA SOUTHERN POWER CO INVITED 80000 MT OF LOW CALORIFIC VALUE COAL FOR AUGUST 1H, 2020 LOADING
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 80,000 Metric Tons (MT) Min 4,200 kcal/kg - Max. ...
Tuesday, 16 June 20
A GLOBAL ECONOMIC SLUMP: WHAT WILL IT MEAN FOR METALS AND MINING? - WOOD MACKENZIE
Back before coronavirus knocked “normal” out cold, the key issues for miners were sub-investment prices, rising requirements for ESG an ...
Tuesday, 16 June 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.58 PCT - XINHUA
China Taiyuan coal transaction price index stood at 124.43 points Monday, up 0.58 percent week on week.
The index, released by China ...
Tuesday, 16 June 20
HIGHER IRON ORE PRICES OFFSET CORONAVIRUS-DRIVEN PRODUCTION RISK - FITCH RATINGS
Lower iron ore production in Brazil, resulting from rising coronavirus infections, should only marginally affect the cash flow of Vale and other gl ...
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- GAC Shipping (India) Pvt Ltd
- Samtan Co., Ltd - South Korea
- Lanco Infratech Ltd - India
- Romanian Commodities Exchange
- Jindal Steel & Power Ltd - India
- Ministry of Mines - Canada
- Parliament of New Zealand
- Sinarmas Energy and Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- PNOC Exploration Corporation - Philippines
- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vizag Seaport Private Limited - India
- Formosa Plastics Group - Taiwan
- Trasteel International SA, Italy
- Maheswari Brothers Coal Limited - India
- Sarangani Energy Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Anglo American - United Kingdom
- Energy Link Ltd, New Zealand
- Eastern Coal Council - USA
- Barasentosa Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Vijayanagar Sugar Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Jorong Barutama Greston.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Timah Investasi Mineral - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- CNBM International Corporation - China
- Simpson Spence & Young - Indonesia
- Deloitte Consulting - India
- OPG Power Generation Pvt Ltd - India
- Bharathi Cement Corporation - India
- Australian Coal Association
- Meenaskhi Energy Private Limited - India
- European Bulk Services B.V. - Netherlands
- Minerals Council of Australia
- Indonesian Coal Mining Association
- Iligan Light & Power Inc, Philippines
- Indian Energy Exchange, India
- The Treasury - Australian Government
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- SMG Consultants - Indonesia
- Borneo Indobara - Indonesia
- South Luzon Thermal Energy Corporation
- Kumho Petrochemical, South Korea
- Bhushan Steel Limited - India
- Videocon Industries ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- SMC Global Power, Philippines
- Africa Commodities Group - South Africa
- Meralco Power Generation, Philippines
- Latin American Coal - Colombia
- Pendopo Energi Batubara - Indonesia
- Ambuja Cements Ltd - India
- Posco Energy - South Korea
- Metalloyd Limited - United Kingdom
- Renaissance Capital - South Africa
- Thai Mozambique Logistica
- Oldendorff Carriers - Singapore
- Electricity Authority, New Zealand
- Bangladesh Power Developement Board
- CIMB Investment Bank - Malaysia
- Siam City Cement - Thailand
- Sakthi Sugars Limited - India
- Electricity Generating Authority of Thailand
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
- Kartika Selabumi Mining - Indonesia
- Gujarat Sidhee Cement - India
- London Commodity Brokers - England
- Thiess Contractors Indonesia
- Port Waratah Coal Services - Australia
- White Energy Company Limited
- Maharashtra Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- Sree Jayajothi Cements Limited - India
- Ministry of Transport, Egypt
- Altura Mining Limited, Indonesia
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- Coal and Oil Company - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- The University of Queensland
- Attock Cement Pakistan Limited
- Commonwealth Bank - Australia
- Uttam Galva Steels Limited - India
- Central Java Power - Indonesia
- Wood Mackenzie - Singapore
- Riau Bara Harum - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Bukit Makmur.PT - Indonesia
- PTC India Limited - India
- Chamber of Mines of South Africa
- Price Waterhouse Coopers - Russia
- Interocean Group of Companies - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Edison Trading Spa - Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Vedanta Resources Plc - India
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Aditya Birla Group - India
- Rio Tinto Coal - Australia
- Semirara Mining and Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- San Jose City I Power Corp, Philippines
- IHS Mccloskey Coal Group - USA
- VISA Power Limited - India
- Standard Chartered Bank - UAE
- Eastern Energy - Thailand
- Jaiprakash Power Ventures ltd
- Global Green Power PLC Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
- Bukit Baiduri Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- Kepco SPC Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Heidelberg Cement - Germany
- Global Business Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Sojitz Corporation - Japan
- PowerSource Philippines DevCo
- IEA Clean Coal Centre - UK
- ASAPP Information Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Mercator Lines Limited - India
- Marubeni Corporation - India
- Parry Sugars Refinery, India
- Global Coal Blending Company Limited - Australia
- Mercuria Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Ceylon Electricity Board - Sri Lanka
- Binh Thuan Hamico - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Dalmia Cement Bharat India
- Kalimantan Lumbung Energi - Indonesia
- Mintek Dendrill Indonesia
- Chettinad Cement Corporation Ltd - India
- Economic Council, Georgia
- Asmin Koalindo Tuhup - Indonesia
- Directorate Of Revenue Intelligence - India
- Georgia Ports Authority, United States
- Kobexindo Tractors - Indoneisa
- Cement Manufacturers Association - India
- Essar Steel Hazira Ltd - India
- Antam Resourcindo - Indonesia
- Tata Chemicals Ltd - India
- Central Electricity Authority - India
- Makarim & Taira - Indonesia
- Energy Development Corp, Philippines
- Orica Mining Services - Indonesia
- Orica Australia Pty. Ltd.
- Singapore Mercantile Exchange
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- Indogreen Group - Indonesia
- Power Finance Corporation Ltd., India
- Sical Logistics Limited - India
- Intertek Mineral Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Carbofer General Trading SA - India
- McConnell Dowell - Australia
- Miang Besar Coal Terminal - Indonesia
- GMR Energy Limited - India
- Gujarat Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Bayan Resources Tbk. - Indonesia
- SN Aboitiz Power Inc, Philippines
- Baramulti Group, Indonesia
- Star Paper Mills Limited - India
- Medco Energi Mining Internasional
- Mjunction Services Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Petron Corporation, Philippines
- Indika Energy - Indonesia
- Indian Oil Corporation Limited
- Bhatia International Limited - India
- Toyota Tsusho Corporation, Japan
- Grasim Industreis Ltd - India
- Aboitiz Power Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- ICICI Bank Limited - India
- Ind-Barath Power Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Planning Commission, India
- Siam City Cement PLC, Thailand
- Xindia Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Larsen & Toubro Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- Globalindo Alam Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- Bhoruka Overseas - Indonesia
- Wilmar Investment Holdings
- Australian Commodity Traders Exchange
- Coalindo Energy - Indonesia
- India Bulls Power Limited - India
- GVK Power & Infra Limited - India
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